Strategy, Structure, People, Milieu and Markets: The Dangerous Interplay

E. Forrest Christian Managing, Organizations, Strategy, Theory Leave a Comment

A common complaint against those of us working with The Law of the Real Boss (or RO or Worklevels, etc.) is that we concentrate too much on the structure of the organization to the exclusion of other important things, such as what the organization actually does.

It’s a valid complaint. So let’s talk about how different important elements interact.

I have been writing up success stories from the GO Society conference in August and one of the fascinating things was that each emphasized the need to get your strategy working correctly first. I began to write this (and even got a good way into it) with that assumption: you start with Strategy which leads to what your Structure you need, which in turn determines who you need where.

Except that it doesn’t really work that way. Markets, strategy, structure, social milieu and people work in linear ways, but it depends upon your current situation. To be frank, the interact on each other not consequently but concurrently, creating a chaotic churn. You have to balance all of them at once. You don’t have the luxury of concentrating on only one, although you may focus the majority of your energy on one.

And I’m using “milieu” rather than “culture” to make clear that I refer to the culture of the greater society, not simply one’s work subculture.

Let’s take Strategy as our example.

When Inglis (now Whirlpool Canada) began it’s ascent from Number 2 to Number 1 in Canadian white goods, it actually started with People. The organization had been having some nasty labour relations problems in the 1980s with the United Steelworkers, not without provocation. They began to get those resolved, then worked on strategy.

The strategy allowed them to figure out what to do. That led to what type of structure they needed to implement (through a reorganization) to put that strategy into motion.

But there’s an interesting twist.

Originally, Inglis brought in McKinsey Consultants to help them with the strategy development. According to one of the Inglis executives, the McKinsey strategy was beautiful, all bound up and with pretty graphs. Unfortunately, “we didn’t have the people to implement it!” So they threw it out and started new to get something simpler.

So People drove their Strategy. The People that they currently had constrained what they could do.

Sometimes, you already have a Structure that constrains your Strategy, especially where you have unionized workforces.

Most of the time, markets determine your strategy.

But not always.

During the heyday of the dotcom boom, companies were creating business models that didn’t exist before. They created their own markets. Their strategy was driven by key people on staff and their creative or cognitive abilities. Google comes to mind as a still current example. Their people drove their strategy which created the markets that determined what structure they would then have.

However, they were all constrained by the social milieu in which they lived. For Bay Area companies, this differed from the milieu midwestern companies work within. A more laissez-faire environment, more sharing of secrets, more cooperation.

Of course, in traditional corporations, Markets drove their strategy, which was constrained by their current Structure. Until you got to a certain level, I don’t think they even thought about People except as machines.

So Social Milieu is the overall constraint on everything. Kind of.

Strategy may be driven by Markets, current Structure, existing People.

Most of the time, People do constrain and drive your Strategy. Either the people you have are a limitation or the people that are available for hire are. Your current staff cannot do anything and you can’t always simply bring in a completely new executive staff. Or any staff, for that matter. They simply don’t have the insider knowledge to effectively work within your corporation’s unique subculture.

They often drive structure. If you have Stratum 5 roles but only Stratum 4 staff, you should probably think about reducing your structure. It will be hard to fill all those Str5 roles with new people effectively without expecting a lengthy ramp-up time. Often, though, the problem is simply moving People around. Who you have can drive your structure, allowing you to either grow or indicating that you should shrink. I think that Kimberly Clark’s old CEO saw that he didn’t have the People to handle the multiple lines that he had and so shrunk the company down to a size where it could dominate particular markets. His choice of markets was driven by who he had, too.

So, what should you do first? It depends. Like all business decisions, or any decision in life for that matter, the circumstances of the problem determine the solution. There is no simple formula of “Do this then this then this then that.” It’s not even as simple as “Markets determine Strategy which constrains Structure which in turn determine which People, all constrained by the greater culture.”

There, wasn’t that entirely confusing?

About the Author

Forrest Christian

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E. Forrest Christian is a consultant, coach, author, trainer and speaker at The Manasclerk Company who helps managers and experts find insight and solutions to what seem like insolvable problems. Cited for his "unique ability and insight" by his clients, Forrest has worked with people from almost every background, from artists to programmers to executives to global consultants. Forrest lives and works plain view of North Carolina's Mount Baker.  [contact]

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